The Color of Law A Forgotten History of How Our Government Segregated America by Richard Rothstein (z-lib.org).epub

studies (e.g., Squires, Hyra, and Renner 2009; Bocian and Zhai
2005) find similar racial disparities. These data are only suggestive.
We would expect minority borrowers, on average, to have lower
rates of qualification for conventional loans than white borrowers
because, on average, minorities have less advantageous economic
characteristics (income, assets, employment, etc.) that are relevant
to creditworthiness. The data disparities, however, are so large that
it is probable, though not certain, that creditworthiness alone
cannot explain them.
Hispanic borrowers were also disproportionately exploited by
aggressively marketed subprime loans.
p. 111, 2 Powell 2010; Donovan 2011; National Coalition for the Homeless
et al. 2009.
p. 112, 2 Memphis and Shelby County 2011, 34, 33.
p. 112, 3 Baltimore 2011, 21–22.
p. 113, 1 Cleveland v. Ameriquest 2009, 26.
p. 113, 3 Stevenson and Goldstein 2016; NYT 2016. Census Bureau data
show that African American homeownership rates fell from 50
percent in 2004 to 42 percent in 2016, while white rates fell only
from 76 percent to 72 percent.
p. 113, 4 Some critics charged that the housing bubble and subsequent
collapse was caused not merely by federal regulators’ failure to
restrain irresponsible and racially targeted subprime lending but
also by active federal encouragement of the practice. According to
this theory, the federal government pressured banks to increase
lending to low-income and minority borrowers, with the threat of
government sanctions under the Community Reinvestment Act of
1974 if banks did not do so. The critics claimed that banks were
unable to satisfy government regulators’ demands for more loans in
minority communities without lending to unqualified homeowners.
This is an unpersuasive claim. It cannot explain why, for example,
so many subprime loans were issued to minority borrowers who
qualified for conventional loans. The Community Reinvestment
Act (CRA) applied only to banks and thrift institutions that
accepted consumer deposits. Such banks represented only a small
share of institutions that made subprime loans that were foreclosed
after the housing bubble collapsed in 2008. Barr (2009, 172) finds
that only about 25 percent of all subprime loans were made by
institutions covered by the CRA. Most were made by independent
mortgage bankers and brokers who were not covered by the law.